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IPR Challenges in the Metaverse

IPR Challenges in the Metaverse

IPR Challenges in the Metaverse

Metaverse, to many is that enigma where the demarcation boundaries between the virtual and real get blurred. It is the coming together of virtual reality and augmented reality. Metaverse presents a world of boundless potential. You may take virtual trips, live an ‘imagined’ life through digital avatars or trade in digital assets. You can own a Raja Ravi Varman painting or a Thor’s hammer in metaverse. In short, metaverse is the virtual extension of our real world.

Why is Metaverse Important?

The importance of Metaverse extends not only to personal experiences but also commercial viability. Brands now can offer you a ‘lived experience’ of their products and services. Imagine, if you could virtually try out all those clothes available on online clothing platforms and then decide what you want to buy! Metaverse is the future that would augment our experiences manifold and hence, it is important to understand the legal aspects surrounding the same.

IPR Challenges in Metaverse

In order to offer the Metaverse experience to its users, goods and services companies would need to either engage entities that create such virtual reality experiences or will need to come up with such technology on their own. This conjunction of goods and services with virtual reality to offer a real-world experience to the users leads to concerns around intellectual property rights. Who owns the IP to the digital assets created, who owns the right to the original content augmented by the power of virtual reality are some questions that arise when such a blended experience is created. To answer these questions in white or black may not be possible, as Metaverse brings together the digital and the real world.  Let us examine the key IPR challenges that may surround the future world of Metaverse:

  • Patents in Metaverse

Tech companies are vying with each other to create innovative metaverse products. Technologies such as virtual reality and artificial intelligence are leveraged to create and power the features of metaverse. The pertinent question that arises in this regard is that: how would these technologies be patented? Can these technologies be brought under the present intellectual property regimes of the world? Under United States patent law, the very first entity to file for a patent for a new, non-obvious innovation that is eventually authorized has an exclusivity on that innovation for a period of twenty years after the patent is granted. Similarly, under Indian patent laws too, a technology which is sought to be protected needs to be novel, have an inventive step and have industrial application. The question of whether a particular metaverse patent is being infringed upon by other technology will be a never-ending source of contention, especially given how quickly the technology is evolving, as it will be difficult to distinguish between a “novel” invention and a mere alteration of existing one.

The Supreme Court of the United States concluded in Alice Corp. v. CLS Bank International (2014) that application software of an offshore mechanism was not patentable because it was an execution of an “abstract idea.” This only adds to the complexities around patenting metaverse technologies. Anyone who is accused of infringing a metaverse patent will almost certainly allege that the patented invention is an embodiment of a “abstract notion,” which is not patentable under normal circumstances.

  • Copyright in Metaverse

               If you build a virtual environment in which third-party producers can show or distribute their creations, one must enforce rules on them to safeguard oneself in case they breach others’ IP rights, and undertake further procedures to safeguard oneself from contributory liabilities. For instance, the U.S. Digital Millennium Copyright Act (DMCA) creates a safe harbour for companies that passively hold user-generated work that violates third-party copyrights, provided the provider conducts a DMCA-compliant notice-and-takedown process and undertakes other authorised procedures. U.S. case law has also indicated that a repeated infringement strategy for cloned works may be required for a marketplace administrator to prevent contributory liability. Copyright protection in the United States extends to “original works of authorship fixed in any tangible medium of expression,” pursuant to US DMCA law. There are several parts of the metaverse that are probably to be copyrighted, such as programs, images, audio and video records. While the metaverse will presumably afford safeguard to copyright owners, there are possible hazards and obstacles. The piracy of copyrighted works is expected to be a concern, and copyright holders may have a challenge when it comes to demonstrating copyright violations when the usage of the original work is small. Furthermore, content creators must guarantee that current licences in underpinning creations encompass the use of those compositions within the metaverse. An excellent instance is that use of stock pictures, which is great on Internet but may not be accepted in the metaverse.

Trademarks in the Metaverse

Trademarks are granted on a territorial basis and hence, a trademark obtained in India would only afford legal protection in India. Metaverse is blurring the territorial boundaries and at the same time is creating an alternative virtual world. It becomes pertinent for technology companies to obtain legal protection for the characters, marks and names they create in this virtual world. However, the laws have still not been revised to cater to the evolving needs that metaverse is generating.

The USPTO has received numerous applications for trademark protection with respect to metaverse. However, many of these marks are already registered in one or more jurisdictions, hence creating a state of confusion.

Current IP laws and Metaverse: A Global Comparison

The current IP laws across countries, still lack the mechanism to address the challenges posed by metaverse. We briefly glance at the IP laws of US, UK and India to assess the challenges being faced by these legislations:

LawsUSUKINDIA
PatentA patent shows who is the original inventor of a product. An awarded patent in the United States confers a 20-year monopoly on the innovation. While several patents for specific metaverse software have been filed, they may be rejected because they are an “abstract idea.”    Patent infringement issues could arise if the process of developing technologies infringes on metaverse patents, and potential trade secret misappropriation issues could arise in virtual conference rooms where confidential information is discussed.According to section 3(k) of the Indian Patent Act, computer programs/software are not patentable in India. Computer-related inventions that provide a technical solution to a problem and lead to overall technological improvement, on the other hand, are patentable.   This needs to be amended to incorporate AR or VR, downloadable software’s in the patentability sphere.    
CopyrightThe Digital Millennium Copyright Act (DMCA), enacted in 1998, aids in the protection of digital copyright laws and provides resources for removing unauthorized or infringing files. While the DMCA only pertains to the internet and not the metaverse, it can simply be amended to incorporate more advanced technologies in the future.While UK copyright legislation does not address NFTs specifically, it appears that a digital fashion item that is the topic of an NFT could be protected as an “artistic work” if all other elements, such as originality and authorship, are met.   The ability of a creator to sue for copyright infringement depends on the type of NFT in question and whether or not the infringing NFT includes a digital copy of the underlying asset. These techniques are yet to be addressed in UK courts.Another area that has to be reconsidered is the applicability of traditional ideas of fair use and fair dealing of copyright. While the four-factor test can be applied to the metaverse from an Indian perspective – namely, (1) the purpose and character of the work; (2) the nature of the work; (3) the portion used in relation to copyrighted work; and (4) the effect on the market and value – there must be a difference in the application of this test in the metaverse.
TrademarkSince trademark laws are not covered by the DMCA, any infringement will have to be handled on a case-by-case basis. So, this can be costly and time-consuming for many businesses, it is hoped that the formation of legal regulations around trademarks in the metaverse would be encouraged. In UK, the current trade mark protection for tangible goods does not cover virtual goods.   As a result, brands will want to make sure that the protection they have in the physical world extends to the virtual Metaverse as well.Since the concept of the Metaverse is still in its early stages and the existing legislation has yet to be changed, it is causing confusion and resulting in the submission of duplicate applications by right holders.        At the intersection between the virtual and real worlds, the use of real-world, third-party trademarks has been a recurring concern. Infringement on trademarks is becoming increasingly common.   Instead of filing new applications, the simplest but most effective method to do this would be to update the Nice Classification and include the option of choosing virtual or real-world to the products or services categories given.

NFTs and Metaverse

Non-Fungible Tokens or NFTs are certificate of ownership attached to digital assets. These ensure that a digital asset’s ownership and/or possession is captured on a digital ledger using blockchain technology. One way of preventing infringement is to offer digital assets through NFTs. A NFT is an authentic certificate wherein the holder of NFT shall own that particular copy of the digital asset, but the IP in the content of the digital asset shall remain with the creator. Digitising assets through NFTs would help in protecting the IP in the original content.

Conclusion

Metaverse, as it stands today, is a complicated jargon of technology. We are able to see just the surface and may not be able to tap the entirety of legal issues it throws at us. Traditional methods of IPR protection may not prove to be very effective in a boundless space and hence, it is pertinent that written agreements be strengthened. Use of technology to counter the issues raised by technology is also an effective mechanism to address IPR concerns in the Metaverse. Metaverse is an inevitable change and would define the way we live and think. A robust legal regime addressing specific challenges posed by the Metaverse can also help in addressing the IPR challenges in the Metaverse.

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